Top Tips on Affiliate Program Marketing
Affiliate Program Marketing – To Use or Not to Use?
That Is the Question
These days you can rarely get online without seeing multiple ads for other websites. This can get interesting (or eerie, depending on your perspective), particularly if you recently did a search on specific consumer items, such as summer shoes or a hotel, because with cookies and other online tracking methods, the ads you’ll see are very specifically targeted – at you.
As with all aspects of the web, ads have evolved and changed; one of the ways in which this has happened is through the added value online ads give to overall marketing and advertising plans for businesses. It was through this evolution that affiliate programs, or associate programs, were created.
Definition of an Affiliate Program
An affiliate program also known as an associate program, is where a merchant will pay you to put a link to their website on your website. This type of advertising is called Pay Per Action (PPA), which, as you can see from its name, only pays when an action is taken by the viewer.Typically, payment to the host site for this service is based on sales made directly from clicks from the host site, not a flat monthly rate. An affiliate can also get paid via volume of traffic sent to a site. Merchants utilizing affiliate programming will have a standard agreement that clearly outlines how you, as the affiliate, will get paid
How an Affiliate Program Works
An affiliate program works by intertwining three parties: the merchant, the affiliate and the customer. Amazon.com was the pioneer in affiliate program and currently boasts a half million affiliate programs, so for the purposes of demonstration, we will use their process for becoming an affiliate:
- You sign up as an affiliate, Amazon assigns you an ID
- Amazon offers links on specific products, not just an overall Amazon ad (you can also select on your own)
- You set up the link on your site with your Amazon ID embedded in the link
- A visitor clicks on the link from your site
- If a purchase of that item ensues, you are given a percentage of the sale
This type of affiliate programming is called pay-per-sale or cost-per-sale, and is just one example of how an affiliate program can work. Other ways affiliate programs can work are:
- Pay-per-click (or cost-per-click) – the affiliate gets paid for driving web traffic to the merchant’s site. No action needs to be taken beyond that for the affiliate to get paid
- Pay-per-lead (or cost-per-lead) – the affiliate gets paid once a visitor visits the merchant’s site and fills out a form on the merchant site that can become a potential sales lead.
Additional Earnings Outlets for Affiliates
As an affiliate, you can also profit if the merchant for whom you affiliate operates either a two-tiered program or residual program. In a two-tiered affiliate program, the affiliate can earn extra money on other sites they have referred to, and become, affiliates of said merchant. This type of program is popular with large companies that use extensive sales forces. In a residual program, the affiliate gets paid on all purchases made by a customer sent from their site in perpetuity. In other words, if I click over to Bob’s Bait Shop from your site, you will earn a commission on every purchase I make from Bob’s from now on – not a bad way to earn a little extra cash.
Affiliate Program Networks
Affiliate programs are simple on the surface, but implementing and executing them takes quite a bit of programming and maintenance on the back-end. This is where an affiliate program network company comes in. Affiliate networks are companies that manage the business between the affiliate and merchant. Affiliate networks keep track of all online activity between affiliate and merchant, and issue payments to the affiliates. They also act as a resource for connecting merchants with affiliates and help affiliates setup merchant links on the websites. Simply put, affiliate networks are the middlemen who help connect one end to the other:
Affiliate networks are good for both affiliates and merchants. On the affiliate side, the networks offer information on the best affiliate programs out there and ensure payment for affiliates; on the merchant side, merchants can take advantage of the advertising potential affiliates offer without straining internal resources to do so.
Affiliate networks make their money by taking a cut of the commission, usually around the 20% mark.
To Affiliate or Not Affiliate – That Is the Question
The main benefit for a merchant to create and implement an affiliate program is that it provides inexpensive, targeted advertising. This can be in the form of targeting a specific audience for your products, or, if you carry a number of items, providing advertising for a specific product.
If you do plan to move ahead with an affiliate program, you need to decide if this is something that you want to handle in-house or hire an outside affiliate network; there are pros and cons to both.
If you choose to implement an in-house affiliate program, you’ll need to have the resources to screen for appropriate affiliates, keep track and analyze all transactions, give clear and concise instructions to your affiliates for set-up and a the creation of accounting programs to manage the payments and finances for your affiliate program. There is a number of tracking software programs available for purchase to help with your affiliate tracking, priced around $500. This is all these programs do, so be aware that all other aspects of your program need to be instituted by you.
If you choose to outsource your affiliate program to an affiliate network, they will handle all of the above-mentioned necessities, but of course, at a price. Signing up with an affiliate network company will cost anywhere between $1000-$5000, depending on how complex your affiliate program will be.
You will also need to deposit money into a cash account from which payments to the affiliates will be executed. The affiliate network will also take a cut of every transaction, roughly 20%, so they will be paying themselves out of this account, too. The upshot of this is that your entire affiliate program – from recruitment to data collection and analyzing to affiliate payments are all handled by the affiliate network company – something to think about, particularly if you are a smaller company seeking to increase web traffic and sales numbers.
Being an affiliate can be a nice, relatively easy way to make some extra money on your website. Keep in mind that it is extra money, however – you aren’t going to become a millionaire by becoming a merchant affiliate.
Affiliate programs work well on many sites, particularly content-oriented websites. If you have a website that is content-driven, becoming an affiliate is an easy next-step for your site. It is best to become an affiliate for a merchant/merchants who have products that somehow relate to your site. For instance, if you are a book reviewer, being an affiliate for a plumbing supply company probably won’t do you much good. The idea behind an affiliate program is to lead people to the merchant site as a next-step in their viewing process; therefore, focus on the elements in your site before signing up to before becoming an affiliate.
Affiliate Program Websites
We would be remiss if we didn’t list some resources on affiliate programs. Good luck! It could be very worthwhile.